So what happened? I still believe it is funds, not fundamentals that rule this market right now. But here's what may have changed the thinking among some portfolio managers. The dollar steadied somewhat and equities plunged. We've seen commodities follow stocks before.

With the high level of open interest and net long positions among hedge funds in the oil market right now, when those bullish positions are taken off the table, a selloff is exacerbated. Joe Terranova, director of trading for MBF Clearing Corp., says "it's like there's a fire at a movie theater and one exit door to go out. Everyone rushes for the exit."

Also, the selling today wasn't isolated to the spot month, long-dated contracts also lost steam and that's the part of the crude curve that helped take front month prices to that all-time high.

Another reason for the selloff: gasoline. Watch the EIA inventory report tomorrow. Reuters survey of analysts expects a slight build in gasoline supplies (already at the highest level in 14 years!) and 2.5 million barrel increase in crude inventories.

This gasoline supply build is expected as wholesale gasoline prices have reached a record a record at the NYMEX on Monday and gasoline demand has fallen for the 6th week in a row on a year over year basis, according to the last MasterCard survey on retail gasoline demand.

"No one wants gasoline right now," says trader Ray Carbone.

But what could throw this market for a loop is an unexpected decision from OPEC. The cartel has remained firm in their view that global oil markets are well supplied and they will not increase production. "No change," says OPEC's president. But, if by a long-shot, the group decides to cut production--look for prices to shoot for new heights.